Contribution splitting

Super contribution splitting with your spouse

If your partner is earning a low income or taking time off work for caring responsibilities, then it’s likely they’re not contributing much super. This means their super can fall behind. However, there are ways you can help your partner’s superannuation continue to grow.

You can do this by:

  • Making a Spouse Contribution to their super account
  • Arranging for Contribution Splitting (also known as Super Splitting)

When you split your contributions, you transfer or rollover a portion of the contributions you recently made to your super account, to your spouse’s super account. You can apply to split your contributions when you are any age, but your spouse must be either less than the preservation age or aged between their preservation age and 65 years, but not retired.

How to apply for contribution splitting

To apply contribution splitting you need to lodge Superannuation contributions splitting application with your super fund in the financial year:

  • Immediately after the financial year in which the contributions were made
  • The contributions were made, only if your entire benefit is being withdrawn before the end of that financial year as a rollover, transfer, lump-sum benefit or combination of these

For example, if you want to split the contributions made to your super account in the 2018-19 financial year, you need to apply in the 2019–20 financial year.

Note: You can only apply once to split contributions made to a particular super fund in a financial year.
You can ask your super fund to transfer to your spouse, up to 85% of a financial year’s taxed splittable contributions.

These are generally any:

  • Contributions your employer made for you (before-tax contributions), including any salary sacrifice contributions
  • Personal contributions you made for yourself that you have advised your super fund you will claim a tax deduction for

The maximum amount of taxed splittable contributions you can apply to split is the lesser of 85% of the concessional contributions for that financial year and the concessional contributions cap for that financial year.

Example scenario of a split super contribution

In 2017–18, Marita had a salary sacrifice arrangement and the super contributions made for her for the financial year are as follows:

  • Salary sacrifice contributions $20,000
  • Employer contributions $10,000
  • Total employer contributions $30,000

At the beginning of the financial year 2018-19, Marita decided to split her contribution to her husband Ken and completed the Superannuation contributions splitting application and lodges it with her fund, requesting that 85% of her 2017–18 employer contributions be split with Ken.

Marita’s fund advised:

  • They could not accept the application because she was not permitted to split $25,500 (85% of $30,000) with Ken as the amount was more than the $25,000 concessional contributions cap
  • They could accept a new application for a split of 83.33% ($24,999), but they were required by law to report that $30,000 had been contributed for her
  • She should seek professional advice about the excess

Marita goes ahead with the 83.33% split. She later receives an excess concessional contributions determination for 2017–18 from ATO based on her concessional contributions of $30,000.

 

Need help with your Super? Please contact the accountants at our Sydney Office